wet exhaust

Yes, theoretically a gas combustion engine should only produce carbon dioxide and water (IIRC).

The more clean water you have dripping out of your exhaust, the cleaner and more efficient your engine is running.

My 67 Coronet 318 dripped a significant amount of water, ran so smooth you could balance a pen on the air cleaner lid at 600 RPM and rev it, and got over 22 MPG highway.